Dell Technologies (DELL) founder and CEO Michael Dell believes talk of a reduction in spending on artificial intelligence is overblown.
“There are always bumps in the road when you launch a rocket and build new capabilities. There are new product cycles, there are new introductions of things and some customers want the existing product faster, others want to wait for the new one. We have all of the above,” Dell told Yahoo Finance at the Citi TMT conference in New York City on Wednesday.
“But the big picture is very clear: there is huge demand, and it is growing, and it is expanding from hyperscalers to service providers, to enterprises, to commercial AI, to sovereign AI, to embedded AI, to the edge, to retail, to manufacturing, to your PC, here, there, and everywhere,” he added.
Dell’s second quarter underscored why the tech giant’s stock has gained an impressive 45% so far this year, in part because it is seen as a key player in the development of America’s artificial intelligence infrastructure.
The company said it had $3.1 billion in AI server sales in the quarter, nearly double the $1.7 billion it earned in the previous quarter.
The company’s Infrastructure Solutions Group (ISG) sales increased 38% to $11.65 billion. AI sales are included in the ISG segment.
Sales for Dell’s client solutions group, which includes PC and notebook sales, fell 4% to $12.41 billion. Consumer sales declined 22% to $1.86 billion, while the commercial business was flat at $10.6 billion.
“What organizations are seeing is that this is a historic opportunity to make their businesses much more productive and efficient, and at the same time, reimagine them given all this capability,” said Dell, who founded the company in 1984.
Overall, Wall Street remains bullish on Dell stock because of its exposure to artificial intelligence and because it appears too cheap to ignore.
“Combining the income opportunity [for AI] Over the medium term, with increased visibility of double-digit revenue growth for the core business and continued focus on operating expenses, we see a solid earnings growth trajectory. [for Dell] “which is not fully appreciated in the 13x P/E multiple at which the stock is currently trading,” JPMorgan analyst Samik Chatterjee said in a note to clients.
Chatterjee reiterated an Overweight rating on Dell shares, the equivalent of a Buy.
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